A side hustle is not required for every hobby. However, if you intend to generate money from yours, you’re running a company! You must now focus on your financial situation.
It’s difficult to turn anything you enjoy into a monetary commodity, particularly if you’re a creative person. It’s no surprise that many creatives feel “bad with money,” given the stereotype that being financially aware is incompatible with being a great artist.
When you ignore your finances, you’re losing not only your peace of mind, but also your capacity to make decent business judgments that come from a position of clarity rather than an emotional “I’ll take what I can get” attitude.
Paco de Leon is a writer, illustrator, and musician who owns a financial education and bookkeeping service. Finance for the People, her book, is a user-friendly approach to managing your finances. As per npr.com, De Leon teamed up with Life Kit to share her greatest money-saving advice for creatives.
Prepare a weekly finance plan
Many financial activities are neglected if we don’t take the time to prioritise them, whether it’s following up on invoices, documenting expenses, paying bills, or researching accountants. Set up a weekly finance meeting with yourself and treat it as sacrosanct to avoid this. Instead of doing things as you remember, set aside 15-20 minutes to an hour to tick things off your list.
Keep your professional and personal finances separate
If all of your money is deposited in the same account and your transactions aren’t labelled as personal or professional, it’s simple to lose track of your income.
As a result, bank with your company in mind. Create separate checking and savings accounts for your personal and professional finances to keep track of your money and how it’s being spent. When you have a clear picture of what you’re spending and earning, budgeting for your business becomes a lot easier.
Taxes must be considered
Another advantage of keeping your work and personal funds separate is that it makes it easier to declare your earnings to the IRS, which you must do regardless of how much money you earn.
You’ll also have to pay both income tax and self-employment tax if you earn more than $400 each year.